Ethics

1. 1
TEACHING OF ACCOUNTING ETHICS  AN
EXPLORATORY STUDY ON ACCOUNTING LECTURERS
IN INSTITUTES OF HIGHER LEARNING IN MALAYSIA
Jaspal Singh1
and Madhavan Poduval2
INTI University College, Malaysia (1
jaspal_singh@intimal.edu.my; 2
madhavan@intimal.edu.my)
ABSTRACT
The increasing globalization of the accounting profession and recent accounting scandals have brought about a
growing research interest on accounting ethics and the need for inculcation of accounting ethics education.
Unless there is a change to corporate values and behavior, accounting graduates will continue to be confronted
with a variety of ethical dilemmas in the work environment. There is evidence that accounting education has
failed to develop students’ intellectual and ethical maturity. To this effect, the Ministry of Higher Education in
Malaysia has taken an encouraging step by issuing the Reassessment Report on Accounting Programme at
Public Universities of Malaysia 2006 (Hala Tuju 2). This report requires the Institutions of Higher Learning
(IHL) in Malaysia to incorporate the twelfth learning outcome of the Bachelor in Accounting Programme, which
is to ‘Demonstrate Behaviour Consistent with Professional Ethics and Social Responsibility’ and also to meet
the requirement of International Federation of Accountants International Education Standards, IES 4, which is,
Professional Values, Ethics and Attitudes. This study, first of all determines that the lecturers are aware of the
need to teach accounting ethics. To this effect, professional values and ethics should be embedded in all courses
in the Bachelor in Accounting programme, but it is also taught only as a stand-alone course. This study
determines at which level the topic of accounting ethics is being taught in both as stand-alone and embedded.
The teaching methodology in teaching accounting ethics is determined for both, as stand-alone and embedded
and what source materials are being used to teach accounting ethics. Finally, this study determines the
assessment techniques adopted when accounting ethics is taught as a stand-alone course and embedded in other
courses. This exploratory study is conducted via close-ended questionnaires administered to accounting lecturers
in public and private Institutions of Higher Learning in Klang Valley.
KEYWORDS
Accounting ethics, Accounting scandals, Accounting frauds, Bachelor of Accounting, Accounting lecturers,
Institutes of higher learning, Hala Tuju 2
INTRODUCTION
Financial reports provided to users are not always showing the actual picture of a firm’s value
or profits. Accounting fraud is when the financial statements are misstated on purpose to
mislead the users of financial statements.
This misstatement of financial information that is synonymous with accounting fraud is
defined by Gerety and Lehn (1997) as disclosure violation, from failure to file appropriate
and required financial statements with regulators to internal fraud that shows lack of proper
internal controls to wilful misinterpretation of the financial health of the firm.
Proceedings of the 2nd
International Conference of Teaching and Learning (ICTL 2009)
INTI University College, Malaysia

2. 2
As posited by Glover and Aono (1995), fraud involves misallocation of resources or distorted
reporting of the availability of resources. According to Glover and Aono (1995), fraud is
caused by not giving importance to ethical behaviour, due to social and educational
imbalances. The statement by Glover and Aono (1995), mentions that accounting fraud is
caused by an ethical problem, which is indeed behavioural in nature. It also indicates that
ethical behavioural malfunction is a social problem that is caused by defects in the education
system.
The issue of accounting fraud has to be tackled from the root of it, which is education. The
detection of accounting fraud alone will not end the problem, we have to look at the
prevention of it as well. (Haberman, 2003) The prevention must go hand in hand with the
notion of having tighter and more stringent rules and regulations.
‘Accounting ethics involves a narrowly prescriptive approach as exemplified by the ethical
codes of the professional bodies’ (Gowthorpe and Blake, 1998: 4; cited by Ho, 2007: 29) and
it has to be inculcated in students, through the accounting syllabus so the students are
prepared to confront any ethical dilemma. Low et al., (2008) posited that it is important to
have ethics as part of an education programme and it is also still possible to mold the thinking
of the accounting students who will enter the business environment once they graduate.
RATIONALE FOR THE STUDY
Accounting fraud has adverse effects on society and it is important that we acknowledge
these damages that accounting fraud can force upon the society. The major corporate
collapses in the United States of America, Australia, Europe and even in Malaysia, have
paved the creation of more serious attempts to bring back the faith of public and other users
of accounting information on the credibility and integrity of financial reports.
The Ministry of Higher Education in Malaysia has taken the first step by issuing the
Reassessment Report on Accounting Programme at Public Universities of Malaysia 2006
(Hala Tuju 2). This report requires the Institutions of Higher Learning (IHL) in Malaysia to
incorporate the twelfth learning outcome of the Bachelor in Accounting Programme, which is
to ‘Demonstrate Behaviour Consistent with Professional Ethics and Social Responsibility’
and also to meet the requirement of International Federation of Accountants International
Education Standards, IES 4, which is, Professional Values, Ethics and Attitudes.
The Malaysian Code on Corporate Governance, which was revised in 2007, has highlighted
integrity as one of the important qualities required in recommending candidates for
directorship. The provisions under Companies Act 2007, highlighted in section 167(A) that it
is mandatory for public companies to set up a system of internal control to provide for a
reasonable assurance. Section 174(8A) also highlights similar focus, as it mentions that it is
mandatory for auditors of a public company to report to the Registrar of Companies of any
fraud and dishonesty committed by any officer of the company. The commitment showed by
the Securities Commission indicated the importance of ethical behavior where the integrity of
directors is always emphasized and the mandatory requirement to report any fraud.

3. 3
Mohammad et al., (2002), posited that the curriculum of some government universities in
Malaysia, did not discuss ethics and ethical issues as a part of the syllabus in the training and
educating accountants. It is also mentioned that many of the aspiring students who intended
to become accountants are not well exposed to ethics and ethical issues. It is evident that no
proper ethics coverage in syllabus is a terminal problem as the quality of students that will be
produced will not be at par and obviously would not be able to tackle ethical dilemmas
effectively.
Kelly (2004) posited that the recent challenges to the accounting profession, which included
the Enron bankruptcy and the indictment and conviction Arthur Andersen, have reinforced
the requirement that accountants must adhere to the highest ethical standards. The personal
values and ethical perceptions of accounting student are attributes that can indicate their
moral reasoning ability, therefore, it is important that ethical values and positive perceptions
are to be taught to these students through an intervention at tertiary level.
According to Chan and Leung (2006), accounting students who are exposed to a core course
of ‘Ethics in Accounting’, in their accountancy degree curriculum, have higher ethical
sensitivity ability, compared to the students who are given only a few hours of integrated
ethical interventions of their entire curriculum coverage.
As posited by Ghaffari et al., (2008), ethics is taught at various levels at tertiary education
and it is common to include ethics as part of a curriculum due to recent accounting scandals.
Despite the widespread agreement that ethics should be an integral part of accounting
education, the implementation has been slow, but many studies have concluded that ethics
education has a positive effect on students. Teaching method used must be able to train the
accounting students to assess the consequences of their actions onto the society, the
organization they work for and onto themselves (Edward, 2007).
Integrated or embedded approach to teach accounting was preferred pedagogically over a
stand-alone course (Madison and Schmidt, 2006; cited by Hurtt and Thomas, 2008), but this
was earlier contended by (Swanson 2005; cited by Hurtt and Thomas, 2008) that integration
leads to superficial, uninformed, and mostly insufficient coverage and asserts that the
integration approach places a burden on faculty members who may be uncomfortable with
teaching ethics.
OBJECTIVES OF THE STUDY
The objectives of this study are to determine whether lecturers are aware of the need to teach
accounting ethics and to determine whether accounting ethics be embedded in the relevant
courses or taught as a stand-alone course. Other objectives are to determine at which level the
topic of accounting ethics is to be taught, to determine the teaching methodology adopted in
teaching accounting ethics and to determine the assessment techniques used in both, as a
stand-alone course and as embedded in relevant courses and finally to determine what source
materials are being used to teach accounting ethics.

4. 4
RESEARCH METHODOLOGY
Based on Gall et al., (1996), this study shows more characteristics of a quantitative research
and a sample that represents population will used to study the behaviour and other observable
phenomena on lecturers teaching accounting courses for Bachelor of Accounting programme
in Institutes of Higher Learning in Malaysia.
The use of statistical methods to analyse data will result in a creation of an objective report or
reports of the research findings, which is not personal. (Gall et al., 1996). This study is based
primarily on questionnaire surveys that were respondent-completed, where the questionnaires
were self-administered by the researchers and the respondents were presented a set of
questionnaire sent to them via email to be completed.
As posited by Ticehurst and Veal (2000), questionnaire surveys provide a rather easy method
of quantifying results for organisations that rely on quantified information in their decision
making. Ambiguity as to how data is collected and analysed can be eliminated, and relatively
complex information can be rather easily summarised, because questionnaires have the
capacity to gather a wide range of complex information.
This study used captive group survey, as type of questionnaire, where members of groups
were used as subjects that would be tested or surveyed. The questionnaire consisted of open-
end and closed or pre-coded questions, where a defined set of possible responses were
provided and the respondents have to choose from the set of possible answers given, and as
being directed by the questionnaire’s requirements.
The respondents of this study were lecturers teaching core accounting courses, such as
financial accounting, management accounting, auditing and taxation, for the Bachelor of
Accounting programme at selected public and private Institutions of Higher Learning in
Klang Valley.
FINDINGS
In total, 68 responded to the emails but only 49 started on the questionnaire and 41 completed
the questionnaire, from which two were not usable. So only 39 questionnaires were usable for
the purpose of this exploratory study, and on average the respondents required about seven
minutes to complete the questionnaire. From the 39 respondents, mainly were from private
university colleges at 74.36%, followed by from private university at 23.08% and from public
university at 2.56%. 64.10% of the respondents were lecturers, while senior lecturers made
up 30.77%, with associate professors at 5.13%.
In this study, the respondents, who are academicians, were asked whether are they aware of
the need to teach accounting ethics to accounting students. All 39 respondents said that there
is a need to teach accounting ethics to accounting students. When the respondents were asked
whether accounting ethics features within the accounting curriculum or not, only 71.79% of
the respondents said it did, 25.64% said no and 2.56% said they do not know.

5. 5
Further, this study wanted to determine whether accounting ethics is taught as a stand-alone
course or is it embedded in other courses. The results showed that 69.23% of the respondents
taught accounting ethics as embedded in other courses, while 30.77% taught it as a stand-
alone course.
From the respondents that said accounting ethics is to be taught as a stand-alone course,
83.33% said that accounting ethics is made a compulsory course, and 16.67% said that they
do not know, whether it is to made compulsory or not. It was also determined that, if
accounting ethics is taught as a stand-alone course, 66.67% conformed that it is taught in the
second year, while 25% said that it is taught in the third year, and 8.33% said in the fourth
year, while none said that it is taught in the first year. But for the respondents who said
accounting ethics is to be taught as embedded in the curriculum, 58.93% said that accounting
ethics is taught is the second and third year, with the least in the first year, at 19.64%. The
respondents who taught accounting ethics as embedded is other courses, were also asked, in
which course is it embedded in, with 27.69% confirmed in Corporate Governance course,
followed by Financial Accounting and Auditing, both at 24.62% each, and Management
Accounting at 13.85%, and least was Taxation (9.23%).
From the respondents that taught accounting ethics as a stand-alone course, the most
preferred teaching method used is presentation, followed by case study and lecture. But for
the respondents who said accounting ethics is to be taught as embedded in the curriculum, the
most preferred teaching method used is case study, followed by problem based learning and
lecture. As to what source materials were used in the teaching of accounting ethics, equal
number preferred the use of textbooks and case study at 24.51% each, followed by articles
(23.53%) and journals (21.57%). Other source materials used are audio-video materials and
also newspaper reports.
As for the assessment techniques adopted, the stand-alone respondents preferred exams with
essay questions and coursework with assignment. For those who said that accounting ethics is
embedded in the curriculum, only 55.56% of them said that it is assessed, with the remaining
said that it is not, and the most preferred method of assessment techniques used were
coursework assignment and exams with essay questions. It was also recommended that case
study is used as one of the assessment technique.
CONCLUSION
The findings of this study concluded that the lecturers are aware that there is a need to teach
accounting ethics to accounting students and most of the lecturers teach accounting ethics as
embedded in the relevant courses in the Bachelor of Accounting programme. Having said
that, accounting ethics is also taught as a stand-alone course, which is not in line with the
recommendation of the Reassessment Report on Accounting Programme at Public
Universities of Malaysia 2006 (Hala Tuju 2), issued by the Ministry of Higher Education for
the Institutions of Higher Learning (IHL) in Malaysia. There are some accounting lecturers
who confirmed that accounting ethics does not feature in the curriculum of the programme
that they are teaching. It is obvious from this study that most accounting lecturers prefer the
use of essay questions in examinations and assignments for coursework as assessment
techniques, but it was also concluded that some accounting lecturers do not assess the
students, especially when accounting ethics is embedded in the curriculum. It is also evident

6. 6
that multiple choice questions for examinations is least preferred to be used as an assessment
technique for both stand-alone and embedded in relevant accounting courses.
As for the teaching methodology used, most accounting lecturers teaching accounting ethics
prefers the case study, presentation and problem based learning methods, with relying less on
the conventional lecture method, this seems to be a more favourable trend, but other methods
such as role play and debate are least preferred. Taxation was the least embedded with
accounting ethics followed by Management Accounting, compared to other courses, such as
Corporate Governance, Financial Accounting and Auditing, that received more preference, in
terms of embedding accounting ethics in its syllabuses.
Textbooks, case studies, articles and journals are still the main source of material used in the
classroom, but a few also used VideoCDs and newspaper reports. It was also highlighted that
there is a lack of awareness of the importance of accounting ethics, emphasis on ethical and
unethical behaviour and real life cases should be included in syllabus. Accounting or auditing
specific cases must be taught to make students understand the impact and importance of fraud
and ethical issues to public, economy and accounting profession.
The limitation of this study is that it did not get enough response from the accounting
lecturers especially from public universities; therefore the result of this study represents
mostly the accounting lecturers of private universities and private universities colleges in
Klang Valley. This is only an exploratory study and a more in-depth research can be initiated
in the future to study the relationship between the teaching and industry experience and also
the qualification of accounting lecturers and the assessments techniques, teaching methods
and source material used.
LIST OF TABLES
Table 1. Survey statistics
Viewed 69
Started 49
Completed 41
Cannot be used 2
Usable 39
Table 2. Type of institution of higher learning
Count Percent
Public University 1 2.56%
Private University 9 23.08%
Private University College 29 74.36%
39 100%

7. 7
Table 3. Designation of respondents
Count Percent
Lecturer 25 64.10%
Senior Lecturer 12 30.77%
Associate Professor 2 5.13%
Professor 0 0.00%
39 100%
Table 4. Assessment techniques
STANDALONE EMBEDDED
Count Percent Count Percent
Exams-Multiple Choice Questions 1 4.35% 2 7.14%
Exams- Essay Questions 10 43.48% 10 35.71%
Coursework- Assignment 8 34.78% 13 46.43%
Coursework- Test 4 17.39% 1 3.57%
Other 0 0.00% 2 7.14%
Table 5. Assessment techniques
STANDALONE EMBEDDED
Count Percent Count Percent
Case study 8 28.57% 19 31.15%
Debate 0 0.00% 5 8.20%
Presentation 9 32.14% 7 11.48%
Problem based learning 3 10.71% 13 21.31%
Role play 1 3.57% 5 8.20%
Lecture 7 25.00% 12 19.67%
Other 0 0.00% 0 0.00%
Table 6. Source material used
Count Percent
Textbooks 25 24.51%
Journals 22 21.57%
Case studies 25 24.51%
Articles 24 23.53%
Other 6 5.88%

8. 8
REFERENCES
Chan, Y.S.S. and Leung, P. (2006) ‘The Effects of Accounting Students’ Ethical Reasoning
and Personal Factors on Their Sensitivity’, Managerial Auditing Journal, 21:4, 436-457.
Edward, M. (2007) ‘Teaching Ethics to Accounting Majors’, The Tax Adviser, 38:5, 294.
Gall, M.D., Borg, W.R. and Gall, J.P. (1996) Educational Research: An Introduction, New
York, Longmans.
Gerety, M. and Lehn, K. (1997) ‘The Causes and Consequences of Accounting Fraud’
Managerial and Decision Economics, 8, 587-599.
Ghaffari, F., Kyriacou, O. and Brennan, R. (2008) ‘Exploring the Implementation of Ethics in
U.K. Accounting Programs’, Issues in Accounting Education, 23:2, 183-198.
Glover, H.D. and Aono, J.Y. (1995) ‘Changing the Model for Prevention and Detection of
Fraud’, Managerial Auditing Journal, 10:5, 3-9.
Haberman, L.D. (2003) ‘Special Report: Sarbanes-Oxley Act Tops NASBA Meeting
Agenda’, Journal of Accounting, 1955 Feb, 22-23.
Ho, Y.H. (2007) Undergraduate Accounting Students’ Perceptions of Accounting Ethics: A
Cross-Cultural Comparative Study, Doctor of Philosophy Thesis, University of Minnesota.
Hurtt, R.K. and Thomas, C.W. (2008) ‘Implementing a Required Ethics Class for Students in
Accounting: The Texas Experience’, Issues in Accounting Education, 23:1, 31-51.
Kelly, P.T. (2004) An Examination of the Moral Reasoning of Accounting Students, Doctor of
Philosophy Thesis, University of Connecticut.
Kerr, D.S. and Smith L.M. (1995) ‘Importance of and Approaches to Incorporating Ethics
into the Accounting Classroom’, Journal of Business Ethics, 14, 987-995.
Loeb, S.E. (1991) ‘The Evaluation of ‘Outcomes’ of Accounting Ethics Education’, Journal
of Business Ethics, 10, 77-84.
Low, M., Davey, H. and Hooper, K. (2008) ‘Accounting Scandals, Ethical Dilemmas and
Educational Challenges’, Critical Perspectives on Accounting, 19, 222-254.
Luper, S. (2001) A Guide to Ethics, McGraw-Hill Higher Education.
Mohammad A.B., Maisarah M.S. and Ainun A.M. (2002) ‘Ethics and the Accounting
Profession in Malaysia’, paper presented at the Asian Academic Accounting Association
Conference, 28-31 October, Nagoya Japan.
Oddo, R.A. (1997) ‘A Framework for Teaching Business Ethics’, Journal of Business Ethics,
16, 293-297.